Reliance Industries exits Iraq, sells oil blocks to Chevron

Reliance Industries has sold its 80% stake in two exploration blocks in the Kurdistan region of Iraq to Chevron as part of the Indian company's rationalisation of its international portfolio.

ET Bureau|

Last Updated: Jul 20, 2012, 04.05 AM IST

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NEW DELHI: Reliance Industries has sold its 80% stake in two exploration blocks in the Kurdistan region of Iraq to Chevron as part of the Indian company's rationalisation of its international portfolio.

Reliance did not reveal the value of the deal, but agency reports said it had sold the stake for about $200 million.

Chevron earlier held a 5% stake in Reliance's second refinery at Jamnagar but it sold the stake back to RIL instead of exercising its option to raise it as the US company was more keen to invest in exploration rather than refining. The two companies then became partners in a shale gas venture after Chevron acquired Reliance's partner in the venture.

"Reliance Exploration and Production DMCC, a wholly-owned subsidiary of Reliance Industries (RIL) has completed the transaction for divestment of its 80% working interest and operatorship in the production sharing contracts (PSCs) for the Rovi and Sarta Blocks in the Kurdistan Region to subsidiaries of Chevron Corporation," the company said in a statement late on Thursday.

Austria's OMV GmbH holds 20% stakes in Rovi and Sarta blocks. "Reliance's exit from the blocks is in line with its portfolio rationalisation strategy of international assets and to create value for the E&P segment. Reliance will continue to look for opportunities to invest globally," the company said.

RIL had drilled two exploratory wells Rovi and Sarta blocks but its outcome could not be ascertained immediately. The blocks are located north of Erbil and cover a combined area of about 1,124 sq km.

Iraqi oil minister Hussein Al-Shahristani had told ET in 2007 at a summit in Riyadh that the contracts had no standing with the Iraqi government. "The companies that have signed the contracts with the Kurdish region may compromise chances of getting future contracts in Iraq," he had said on the sidelines of the summit. But, later the matter was resolved.

While announcing the deal in 2007, RIL president-international operations Atul Chandra had said in a statement: "We are pleased to reach an agreement with the KRG on the two production sharing contracts. We hope and believe this will be an investment that will provide long-term benefits to all the stakeholders." RIL had also set up a local office in Erbil.

With its exit from Iraq, RIL's international oil and gas portfolio has shrunk to 11 blocks, two in Peru, three in Yemen, two each in Oman and Colombia and one each in East Timor and Australia.